Tracker holders celebrate

The FTSE 100 index came close to its high point last week - great news for the thousands of people who invested in FTSE 100 tracker funds.

Last week, the FTSE 100 was within 80 points of its July all-time high of 6,620.6 and, on Thursday, leapt by more than 100 points.

Yet experts think there is more to come. A survey of 12 top fund managers, by independent financial adviser Bates Investment Services, found that the most optimistic fund managers thought the FTSE 100 would end the year equalling the summer's peak.

The most bullish managers thought that by the end of next year the index will be close to 7,200. But expect more jitters.

Tim Cockerill, managing director of adviser Whitechurch, says: 'There's a feeling that people are buying now because there are concerns about the millennium bug disrupting next month.'

This could mean a rough ride for investors in December.

The advantage of trackers is that they are usually cheap, safer than funds investing in small companies and are easy to check on - you just need to look at the FTSE index. Marks & Spencer, Halifax and Direct Line all run FTSE 100 trackers.

For a different way of tracking the FTSE 100, Close Fund Managers has launched its second FTSE 100-linked split- capital investment trust.

As with all split-capital investment trusts, the structure does little to encourage first-time savers. But this is just another fund where investors' returns are linked to the leading index's performance.

This fund has two different share classes - income shares and zero- dividend preference shares.

The zeroes - which pay out a fixed return of 8.75% a year over five years - are aimed at people who want a set return.

The income shares have an expected yield of 9% a year, but this will increase if FTSE 100 dividend yields rise. However, there is a risk that at the end of the five years you may not get your capital back.